CHAPTER 3 CONTRACTS WITH LAND SERVICES CONSULTANTS
| Jurisdiction | United States |
(Mar 2010)
CONTRACTS WITH LAND SERVICES CONSULTANTS
Senior Counsel, Black Hills Corporation
Golden, Colorado
Douglas W. Gundry-White
Land Manager, Black Hills Exploration and Production, Inc.
Denver, Colorado
DOUGLAS W. G. GUNDRY-WHITE
Douglas (Doug) Gundry-White has over thirty-eight years of experience in the oil and gas industry. He has been both a company landman as well as an independent consulting landman. His experience has included various roles with major and independent companies, as well as land management positions with larger independents. As an independent consulting landman, Mr. Gundry-White provided consulting services in the industry to various major and independent oil and gas companies. Such land and business services included internal land and administrative management. In 2009, Doug joined Black Hills Exploration and Production, Inc. as Land Manager.
CARLETON L. EKBERG
Carleton L. Ekberg received his B.A. from the University of Denver in Mathematics in 1970. He received his J. D. degree from the University of Denver in 1977, where he was a member of the Denver Law Journal.
Mr. Ekberg was in private practice with Poulson, Odell and Peterson, LLC from 1977 through October, 2005. During that time, he represented oil and gas companies on a variety of issues, including title work, oil and gas transactions, oil and gas conservation matters, and public land law issues. In November, 2005, he left private practice to become Senior Counsel and Director of Land at Black Hills Exploration & Production, Inc. In 2008, he became Senior Counsel of Black Hills Corporation.
Mr. Ekberg has been a trustee of the Rocky Mountain Mineral Law Foundation, and served as a reporter and co-reporter (Federal-Oil and Gas) for the Rocky Mountain Mineral Law Foundation Newsletter. He has presented numerous papers at the annual institute and at special institutes of the Rocky Mountain Mineral Law Foundation. He has also given presentations to industry groups such as the Denver Association of Petroleum Landmen, the American Association of Professional Landmen, the Denver Association of Lease and Title Analysts, the Denver Association of Division Order Analysts, and the National Association of Lease and Title Analysts.
1. Introduction
The cyclical nature of the oil and gas industry has been evident over the past 30 years.1 The ebb and flow of the industry has resulted in a corresponding ebb and flow in the demands put on the in-house land staff of oil and gas companies. Regardless of the status of the industry, however, oil and gas companies have used land consultants to augment and provide support to the internal land functions for a variety of purposes and in a variety of ways. Land consultants have been used to supply project services on a sporadic or recurring part-time basis when the addition of full time staff positions is not justified; to provide support on a discrete project with a limited time frame where existing internal staffing is insufficient to address the added demands of the project; to provide strategic services to implement the acquisition, exploration, and development plans of the company; to provide specialized services for which the land consultant may have specific expertise or talent; to mask the position of the company in a new play; and for a variety of other reasons. Those services may be performed routinely or sporadically in the company offices, in the offices of the land consultant, or in the field. In addition, land consulting services may be performed for an oil and gas company by an individual contracting directly with the company, or through a land consulting company where one or more land consultants associated with the land consulting company participate in the land services performed for an oil and gas company.
2. Primary Relationships
In the performance of land consulting services, four primary relationships may exist. First, there is the relationship between the oil and gas company and an individual acting as a land consultant, where land consulting services are performed directly by the individual for the company. Second, there is the relationship between an oil and gas company and a land consulting services company. In this case, the land consulting services company provides one or more land consultants to perform the consulting services needed by the oil and gas company. Third, there is the relationship between a land consulting services company and the individual land consultants that provide land consulting services to one or more oil and gas companies through arrangements made by the land consulting services company. Fourth, there is the
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relationship, if any, that may exist between an oil and gas company and an individual land consultant who is performing land consulting services for the company through a land consulting services company.
The fundamental components of the contractual relationship between the oil and gas company and the land consultant, whether an individual or a land consulting company, for the performance of land consulting services are generally recognized in the industry. So are the fundamental components of the contractual relationship between a land consulting company and an individual land consultant for the performance of land consulting services through the land services consulting company. The specific terms of the arrangement for land consulting services between an oil and gas company and a land consultant, whether an individual or a land consulting company, or between a land consulting company and individual land consultants, are generally captured in a land consulting agreement (LCA). LCAs come in a variety of forms, from single page documents that outline generally the terms of the arrangement, to longer agreements that provide greater specificity of the material terms of the arrangement. The purpose of this article is to identify and discuss the material terms of the contractual relationship, and how the perspectives of the oil and gas company, the individual land consultant, and the land consulting company impact the agreement of the parties as to those material terms.
3. Perspective of the Parties
Many perspectives are involved in the execution of an LCA: that of the legal representative of the oil and gas company; that of the legal representative of the individual land consultant or the land consulting company; that of the in-house landman supervising the services conducted by the land consultant; that of the land consulting services company; and that of the individual land consultant, whether performing services directly for the oil and gas company or through a land consulting services company.
The in-house oil and gas company lawyer, or the private practitioner hired to represent the oil and gas company, has the responsibility to minimize the exposure of the company to risk. As a result, he or she wants the LCA to address all issues that might arise with respect to the arrangement. The oil and gas company's legal representative does not want a surprise arising under the LCA on a matter that could reasonably be anticipated. The oil and gas company legal representative wants to ensure that all material rights and duties of both the company and the land consultant are clearly identified, and to ensure that remedies are defined for any failure of performance.
The oil and gas company landman may recognize the need for the thorough and detailed document desired by the company's legal representative. However, many landmen and land consultants in the industry have substantial experience in the industry and the oil and gas company landman supervising the land consultant or land consulting company may have a long-standing working relationship with that land consultant or land consulting company, one that has survived the landman's move from one company to another or, in the case of an individual land consultant, the land consultant's association with various consulting companies. The existing working relationship has been based on mutual respect and trust that has been
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justified by years of success in providing land consulting services with no significant disagreement or dispute. More likely than not, the consulting arrangement has not been based on a formal written agreement. As a result, the oil and gas company landman may be reluctant to ask the land consultant or the land consulting company to enter into a formal written LCA when none has existed in the past, or to sign an LCA that may be more exhaustive in treatment of various terms than an existing written LCA under which past services have been performed. In any event, the oil and gas company landman is concerned about having an agreement that will be signed by the land consultant or land consulting services company and that will not change the nature of his or her existing relationship.
The land consulting services company may also recognize the need for a thorough and detailed document to govern the relationship between the land consulting services company and the various land consultants that it engages. However, the land consulting services company may have a long-standing working relationship with a land consultant, one that has survived over time and that has been based on success, mutual respect and trust. The land consulting services company may also be reluctant to ask the land consultant to enter into a formal written LCA when none has existed in the past.
The land consultant or the land consulting services company should take comfort in the fact that the consulting arrangement is governed by a written document that defines his, her, or its responsibility and authority, and establishes his, her, or its right to payment for services performed. However, that written document may place time and geographic restrictions on consulting opportunities...
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